Thursday, September 6, 2012

The Other Senior Health Care Program: Romney/Ryan's Vision for Medicaid

How Republican Mitt Romney’s vice presidential pick would change Medicare has been getting a lot of attention, but Rep. Paul Ryan’s (R-WI) proposed cuts to the Medicaid program, which Mr. Romney and the Republican party have now adopted, are bigger and arguably more drastic.

Although most Medicaid recipients are poor children and their families, the program also covers the cost of nursing home and other long-term care for more than 4.4 million Americans, most of them elderly.  In addition, Medicaid helps millions of low-income seniors afford Medicare.

As with his Medicare proposal, Ryan’s plan for changing Medicaid, which has twice passed the Republican-led House, is all about shifting costs away from the federal government and onto others.  Whereas with Medicare Ryan would limit the federal government’s exposure and shift additional costs to seniors, in the case of Medicaid Ryan would shift the risk to the states and ultimately to beneficiaries, including seniors.  But, unlike with Medicare, the change would start right away.

The proposal would turn federal Medicaid funding to states into a "block grant," something proposed by George W. Bush in 2003 and by Newt Gingrich in 1995. Rather than the current system, under which the federal government matches every dollar that states spend on Medicaid, under the Ryan plan starting next year states would receive a fixed amount every year, which would only increase with population growth and the overall cost of living.  The grants would be indexed to grow much more slowly than health care costs and would not take account of economic downturns or natural disasters like Hurricane Katrina, when Medicaid rolls temporarily expand.

The result, according to an analysis by the non-partisan Congressional Budget Office, is that by 2022 federal funding for Medicaid would fall 35 percent below what the government now is projected to provide states, and the shortfall would be 49 percent by 2030.

States are hardly likely to make up for this dramatic funding loss by boosting their own Medicaid spending.  Instead, they will find ways to cut people, including some applicants for long-term care coverage, from Medicaid eligibility.  How many people? According to an Urban Institute analysis, between 14 million and 27 million fewer Americans would be covered by Medicaid in 2021 than under the current system.

Not only would millions more citizens be uninsured or underinsured, but states would reduce benefits and cut already-low payment rates to health care providers, meaning that more doctors, hospitals, and nursing homes would refuse Medicaid patients. It would be easier for states to make these changes than under current law because the Ryan plan would give states additional flexibility in designing their Medicaid programs and eligibility criteria.  Key protections for nursing home residents, such as those protecting residents' spouses from impoverishment and setting limits on when states can place liens on homes, could go by the wayside.

Ryan would also overturn the new health reform law, the Affordable Care Act, thus preventing 11 million people from gaining Medicaid coverage by 2022, according to Congressional Budget Office estimates.  This means that the total number of Americans that the Ryan plan would cut from the Medicaid program could approach 40 million.

Ryan and his supporters point to the savings to the federal budget over the next decade: about $750 billion through the block grants and $642 billion by repealing the Affordable Care Act.  This, they contend, will address Medicaid's growth.  Since June 2007, just before the start of the recession, some 10 million people have been added to Medicaid's rolls.

Update: the proposed changes to Medicaid are now part of the Republican party platform.

More resources:
Primer: How Paul Ryan's Plan Would Change Medicaid (PBS NewsHour)
Is Medicaid Doomed? How Ryan's Plan Would Affect America's Very Poorest (The Atlantic)
Paul Ryan’s biggest budget cuts are to Medicaid, not Medicare (The Washington Post)
How the Ryan Budget (and Republican Platform) Would Hurt Current Nursing Home Residents (Center for Medicare Advocacy)

Reprinted with the permission of ElderLawAnswers.

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